Pipeline companies’ feeble communications efforts: no wonder nothing gets built

A pleasant aspect of writing for the BOE Report is the exposure to some truly interesting and thoughtful people. A necessary condition for getting the most of these interactions is to look past the preconceived notions that always leap to mind when reading a bombastic email. Sometimes stupid comments are just stupid comments, but often they are not at all, and the only way to find out is to pay close attention to what’s being said. Or, more importantly sometimes, what is missing.

I recently received an email from a gentleman in Quebec who was not wildly impressed with a BOE Report article from a while back about the wisdom of building the Energy East pipeline. At first glance I was dismissive of the note; obviously negative feedback is often just blistering blather that isn’t worth reading. But in this instance, embedded in the note were some interesting points; interesting in that the person had a negative opinion of pipelines and oil sands but was at the same time genuinely inquisitive about the business.

Through subsequent email exchanges, I got a better understanding of the person’s strong negativity but felt better about it upon realizing that some fundamental misconceptions existed about the pipeline business, about oil sands, and about Canada’s energy realities. In other words, there was a general lack of understanding about many aspects of the oil production and transportation business.

To paraphrase some key points, the man was gravely worried about the impact that an Energy East spill would have on Quebec’s waterways. The concern emanated from a few key beliefs about pipelines that simply are not true, but are highly recognizable as the work of various environmental groups hell bent on spreading disinformation.

For brevity, here are but two of the salient ones. First, the gentleman was under the impression that the diluent component of an oil sands production stream is a mysterious concoction made of substances “whose identity are kept a secret.” Second, he queried as to how pipeline companies dealt with the abrasion caused by bitumen as it flows through pipes, that is, how the pipes were handled to ensure the abrasion was spread evenly across the inside of the pipe.

These are important questions. They are not important for the issues they raise – neither of these is a genuine concern. Diluent is primarily light oil, not mysterious at all, and dilbit is not abrasive – for example, some oil sands pipeline systems have transported both diluent and dilbit for 30 years. If dilbit was abrasive those pipelines would be in tatters by now.

The key point is this: They are important questions because they highlight the inexcusable gulf between what the public knows and what it should know. These basic bits of information, which may have led this person to support Energy East rather than oppose it, are so ridiculously easy to communicate effectively that it’s incomprehensible why it hasn’t been done. Pipeline companies, you wish to install pipe in close proximity to major waterways near large population centers. Those of us in the energy industry know it is the safest way to transport large quantities of oil, and we also know that Canada and the world needd that oil to maintain our standard of living.

But many people don’t see that, and the energy infrastructure industry is doing an incomprehensibly poor  job of adding illumination. Putting up a few safety facts on a website isn’t good enough. If you think it is, the evidence is overwhelming that you are wrong, because the enemies of pipelines are pounding you into the ground like a tent peg.

Pipeline companies need a considerably large change of mindset. The responsibility for communicating the safety of pipelines seems to have been turned over to CEPA, the Canadian Energy Pipeline Association, who does a good job of presenting facts, diagrams, maps, etc. on their pretty website. I even used one of their stats above. But for the general public, none of this helps one bit. The home page buzzes with rotating banners announcing that “$1.3 billion spent on safety in 2015” and “$34 million invested in local communities in 2015” – both excellent, auditable numbers that resonate for not even one millisecond with the required segments of the audience.

Yes, it’s a wonderful bag of facts, all in one place. If that was all there was to it, then the debate would have been settled long ago and all the pipelines would be built. Facts like those on the website can be found by anyone with any inclination, yet the battle is being lost in a ferocious manner. They are doing the right thing by having it available, but it is unfortunate that it carries no weight.

The budget for these communications should be in the tens of millions of dollars – a material portion of the project cost. And that doesn’t mean creating banners that say “Safety is our number one priority” or some such cliched crap. Undeniably, media experts surely coach you to “stay on message”, but face reality – those pathetic attempts at sound bites are asinine, empty, and worthless. Do something real. Show some detail, and prove what you’re saying. Why not dig up a segment of pipeline that has transported dilbit for 30 years, cut it into pieces, and put those on display to prove that they remain in good shape? Why not haul those pieces from town to town to town with a squadron of effective representatives until that debate is as dead as it deserves to be? Why not show a diagram, in clear detail, of what is involved in a water crossing, and how it’s monitored and maintained? Most people seem to think corrosion occurs from inside; why not bring examples of actual corrosion and show how it mostly happens from the outside? Why not show a smart pig and what it can detect, in a demonstration? Why is there not a semi-load of goods made from petroleum products being displayed in every community across the country, to show what’s at stake? Come to think of it, why is a simple writer for the BOE Report coming up with these ideas, while the ones with multi-billion dollar projects at stake are creating banners announcing that they care about communities, banners that might as well line bird cages?

As an overarching question then, why on earth aren’t these companies putting a serious effort into communication? Not flashy ads, not local team sponsorship, but actually taking the bull by the horns and fighting to stem the tide of misinformation, rather than letting the eco-warriors run up one side and down the other, unimpeded?

What’s even more galling is that these businesses are incredibly good at communicating when they set their mind to it. For example, energy infrastructure companies love their strong business models, they love the stock market success, they love their dividends. These factors are all communicated with exquisite precision to investment banking analysts and any capital market parasite that could impact share prices. That relationship is one of near-perfect communication; countless hours are spent working on IR presentations, presenting the presentations, and walking analysts through every minute detail of the business to make sure there are no misconceptions.

And at the same time, residents of distant provinces and countries are looking for answers, all the while believing (and spreading) misinformation that is mortally wounding the energy business. What is so ironic is that it is incredibly easy to disprove this junk science. It is not hard to show that bitumen is not corrosive. It is not hard to show that it is not abrasive. Every company that goes near the stuff could provide samples of pipe to prove it. If they can’t, that must mean it is corrosive or abrasive, in which case the fight is over anyway. Building a website that tells everyone everything is fine simply doesn’t work.

There really is no choice in the matter – adapt, or concede the war. Maybe that’s considered a legitimate game plan in the business; if no new pipelines are built well that just makes the existing ones that much more valuable. That’s a pretty cynical view though; no one would think that, would they? I hope we’re all keeping in mind what’s at stake for the Canadian energy industry, and a good chunk of the Canadian economy.